Monday, September 7, 2009

10 important smart financial questions

1. How long would it take you to save $1 million and how long would it take you to borrow $1 million?
Discuss : Let’s us talk about RM30 thousand only instead of $ 1 million. If my annual bonus & saving is RM3 thousand (3K) then I need to wait about 10 years to achieve RM30K. But you are able to borrow RM30K from Banker within a few weeks when you purchase a property or personal loan. This is the time frame gap between two scenarios. Saving is difficult than borrowing money from banker. Remember do not borrow from loan sharp. It is a financial trap.

2. Who is going to get rich in the long run? Someone who works all their lives trying to save a million dollars? Or someone who knows how to borrow a million dollars at 10% interest and also knows how to invest it and receive a 25% per year return on that borrowed million dollars
Discuss : As discuss on above, saving is tougher than borrowing. Principally, all the business owners are using bank to run their business. We can see that most of the richest people in the World are running a business either online or offline.

3. To whom would a banker rather lend money? Someone who works hard for money, or someone who knows how to borrow money and have that money safely and intelligently work hard for them
Discussion: Bankers are likely to lend their money to a businessman/woman with well establish business compare with an employee. This is my past experience borrow money from bank. They will see financial statement (monthly or annual income) and they will only lend 30% from your income. This is why financial statement is essential in this reality world.

4. Who would you have to be and what you have to know in order to call your banker and say, ‘I want to borrow a million dollars.’ Then have the banker say, ‘I will have the paper for you to sign in twenty minutes.’
Discussion : If you have an asset in your hand such as property, banker will treat you as KING because they can gain good income from your loan.

5. Why does the government tax your saving but give you a tax break for being in debt ?
Discussion : If you are high income employee (more than RM100K per annual) in Malaysia, you must pay 28% of your annual income to government. However, if you are earning same amount as above employee, the tax is much lover than 28% because there are many tax break can be benefited to a business owner.

6. Who has to be financially smarter and better financially educated? A person with a million dollars in saving or a person with a million dollars in debt?
Discussion : A person with a million dollars in debt must smarter and better financially educated. These groups of people are running a business. Their passion in business enables them to get richer and richer due to this leverage.

7. Who has to be financially smarter with money? Someone who work hard for money or someone who has money work hard for him.
Discussion : Before we have money to work hard for us, we need to work hard for money if you start with nothing.

8. If you have a choice of education, would you choose to go to school to learn how to work hard for money, or would you rather go to school to learn how to have money work hard for you
Discussion : This is a survival world and no person like to share wealth.

9. Why is it that a banker will gladly lend you money to speculate in real estate, but will hesitate to lend you money to speculate in the stock market
Discussion : Real estate is permanent asset which is existing forever and valuable compare with stock market. Stock market will be a piece of blank paper if the markets bear.

10. Why do people who work the hardest and save the most pay more in taxes than people who work less and borrow more
Discussion : The road of business is tougher than work for people. Initial stage of business perhaps you gain nothing

Tuesday, September 1, 2009

Progress Report

I still remember when I was a Planter and every month before middle of the month I need to submit progress report to Headquarter. In the progress report I need to report the yield, operating cost, work being carried out such as spraying & manuring. These entire figures can be extracted from the account and daily record book. The main reason of progress report is to enable HQ to monitor the estate operating and maintain the operating cost within the budget .This is why plantation company able to generate profit with reasonable cost.

Similar with our personal financial status, we need to review monthly or quarterly to avoid overspent. Most of us are busy with our career and ignore our financial status. I work very hard for the company when I was a junior planter. There is no much entertainment in my life and in my mind only duty and duty. I work nearly everyday and never feel tired during young time. I start review my life and financial status when I promoted to senior post. This is the difference between you live in comfortable zone with “poor” zone. When a person is poor in financial, he/she is unable to see his/her future because his/her time is used by their employer. However, when you are in comfortable zone, you are using people time and energy to do your duty. This is why we must look for plenty of money to live in comfortable zone. No because we are greedy in money but when we are in comfortable zone, we are able to review and think out of the box.

Progress report is a powerful tool even you run a small business. You need to sit down to think and review what you have done during the month. This is why I need to retire as young as possible from financial trap. When you have retired then you are able to appreciate your life. Time is precious and don’t waste it….appreciate the time.